Author: Iftach Halperin, Sr. Product Manager
In today’s supply chain, where consumers taste is rapidly changing, product life spans are getting shorter and shorter, omni-channel sales have caused companies a serious disruption in demand volatility, managing your entire portfolio has become crucial, especially the long tail inventory.
The long-tail is a concept that describes items (e.g. SKUs) that aren’t so predictable and don’t have high volumes.
When this long-tail is not well-managed inventory gets obsolete (e.g. “dead stock”), company’s portfolio is getting larger and larger as new product are constantly introduced to innovate and satisfy consumer’s needs, inventory cost gets much higher and make things much harder to manage and control.
One of the main reasons this happens is that in most companies there isn’t any clear and structured process to manage products End Of Life (EOL).
That is a well-known problem… BUT the good news is that there is a great solution which addresses this issue: EOL Management.
The EOL management is a part of a S&OP process, a 5-steps process that integrates business planning, and it’s appeared on the very first step – Portfolio planning. In this step the company manages multiple marketing/ product activities that have a direct impact on supply chain & operational performance.
We have listed for you the 4 common and practical steps to phase out a product from your portfolio:
1. Announcement & Notification – make sure all the stakeholders are familiar about your business intentions to end the product’s life including a detailed plan of how and when.
2. Forecasting Block – Update the product forecast accordingly to the remaining stock. One of the common mistake companies do is forgetting to make the item “inactive”, thus, creating a continuance rolling forecast where no demand should be generated.
3. Purchasing / Production Block – determine the date for the last production/procurement of the product otherwise your automatic MRP will keep creating a purchasing recommendation which might lead to excess & undesired inventory.
4. Sales Order Block – if you don’t want to sell this product anymore make sure you block sale orders option in your ERP to prevent future customer orders.
Our tip: Transparency and clarity of EOL process will significantly reduce uncertainty and the overall objections from all the stakeholders.
We at Intelichain have designed a dedicated and practical EOL Management digital platform that helps you find the best EOL candidates (using machine-learning recommendations) and optimize your integrated business planning across all the business-divisions.
We would love to share it with you, contact us!
